HIRING A CONTRACTOR? FOUR COMMON MISTAKES TO AVOID

Now that kids are back in school, it’s a great time to tackle large home improvement projects. Many DIY projects appear to be straight forward, however many seemingly viable projects can evolve into major disasters.

Before you hire a contractor to create your dream home theater, finish your basement, etc., be sure to avoid common mistakes by following these steps so you don’t lose unnecessary time and money.

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Do your homework. Talking to customers who have used your potential contractors in the past is critical, along with checking their Better Business Bureau rankings. It’s common for potential customers to ask contractors for references, so they should be forthcoming with a list. Be as specific as possible by asking past clients questions such as:

• Was the project completed on time and on budget?
• Are you pleased with the results? You may even ask to see the finished product.
• Was the job site safe, neat and as clean as possible?
• Were the workers careful and courteous with your property?

Qualify contractor prospects. Once you’ve narrowed down your list of contractors who’ve received rave reviews, it’s time to ask them questions and procure bids. Be sure to ask questions such as:

• What size jobs do they normally do and does your project fall therein?
• Are they willing to provide financial references such as from banks and suppliers?
• Will they have any other projects going on at the same time, and if so, how many?
• How long have they been working with their subcontractors?

Procure bids, blueprints and payment schedules. Conscientious contractors will gladly supply detailed bids and depending on the size of the project, a set of blueprints. Procuring bids with detailed costs including cost of materials, labor, profit margins and other expenses is the only way to accurately compare bids. Keep in mind the rule of thumb that materials typically count for 40% of the total cost and the balance covers overhead and profit margin, which is typically 15% to 20% of the total bid.

Financial status and work ethic often manifest themselves in payment schedules. If the contractor mandates half of the total bid up-front, he may be suffering financial challenges or worry that you will not pay for the job once work begins. However, for most large projects, only 10% of the total cost is typically due when the contract is signed. Three equal payments of 25% are commonly disbursed during equally-spaced intervals for the total project duration, with the balance of 15% paid upon final completion.

Talk is cheap—get everything in writing. Obtaining everything in writing is paramount to insuring a successful project. Make sure that the contract includes every step of the project—the payment schedule; proof of liability insurance and worker’s compensation payments; a start date and forecasted end date; specific materials and products to be used; and a requirement that the contractor obtain lien releases (which will protect you in the event that he doesn’t pay his bills) from all subcontractors and suppliers.

Article by: Jennifer Elkow